AI project scores $400K Aussie gov’t grant to combat crypto money laundering

The Australian government is backing a team of researchers to develop an artificial intelligence tool to combat money laundering by tracking crypto transactions.

The Office of National Intelligence and the Department of Defence National Security Science and Technology Centre will support three blockchain experts with a total of $400,000 (AUD 600,000) in funds.

The trio includes Vallipuram Muthukkumarasamy of Griffith University; Professor Ryan Ko from the University of Queensland; and Professor Marimuthu Palaniswami from the University of Melbourne.

The so-called “big-data toolkit” will crunch huge amounts of blockchain data and link laundered crypto back to criminals.

Over the course of three years, the project will create new tools based on AI to analyze anonymized transactions. It hopes to link them with financial crime patterns to effectively identify perps, Muthukkumarasamy explained.

“It will develop a novel investigative toolkit to facilitate attribution — such as source identification and legal evidence — of criminals linked to digital payments to crime in almost real-time,” Muthukkumarasamy added.

Although blockchain is technically public, the sheer amount of on-chain activity can create an overwhelming workload for authorities.

For example, around 300,000 Bitcoin transactions happen every day. Ethereum’s transaction volume is much higher at 1.1 million daily transactions.

In June, the chief of the Vancouver Police Department told reporters that his money laundering team is spread thin.

Money laundering gives crypto a bad rep

Criminals tend to launder their crypto with mixing services to enhance anonymity.

Crypto mixers break down lump sums and distribute them across thousands of wallets. Afterwards, they return the amount in smaller amounts, sometimes in a different cryptocurrency.

In April, authorities caught up with Roman Sterlingov who ran the notorious Bitcoin Fog mixing service. Sterlingov’s service laundered around 6% of the total Bitcoin supply.

However, mixing services aren’t solely used for laundering crypto. They are often used legitimately to increase privacy.

Crypto’s close relationship with money laundering means traditional finance tends to give it a wide birth. HSBC stopped its clients from purchasing MicroStrategy stock because the tech firm owns too much Bitcoin.

Not to mention, the owner of the Australian crypto exchange Bitcoin Babe said banks treat her like a terrorist because of her cryptocurrency connections.

Read more: [A history of Bitcoin Fog, the crypto mixer that washed 6% of BTC’s supply]

Indeed, governments are beginning to beef up their ability to tackle cryptocurrency-related crime.

Last week, the US Department of Justice (DoJ) announced its National Cryptocurrency Enforcement Team (NCET).

The DoJ’s new division will keep a close eye on crypto exchanges, crypto mixers, and tumbling services.

[H/T The Age]

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